IPM Review

Looking back to July 13 IPM update, following chart was sent out.

Now look at where DJIA topped.

Positive Divergence

Charts below show positive divergence between small caps and large caps. While small caps are making higher lows, DJIA and SPX are making lower lows. If this divergence holds, its positive for the market.

Russell 2000

DJIA

SP500

IPM Model Update

Latest IPM Model Update has been emailed to subscribers:

Excepts:

"Next week’s economic calendar is fairly busy along with several earnings reports. We will be
getting the 2nd quarter GDP report, Fed Meeting is scheduled,  ... 

If one of these reports results in a significant market decline or a rally, investors might conclude that the trend has reversed and one should either short the market or go long. However, the benefit of having access to the Inflection Point Model’s turn information is that one knows that they should either short on a rally or go long on a decline, with pre-defined risks. Rather than being pre-consumed with media headlines and getting whipsawed."

Whipsaw is the enemy of a trader in the long-run. It not only results in losses but also damages the confidence.

In this update, next IPM turn date is also highlighted. Next turn date is schedule to be a _______. Based on the next turn date information, one can properly navigate the trade

Bonds nearing a Top

Bonds are nearing a near-term top per Elliott Wave structure.

Bond decline could result in US equity rally.

This is in line with the IPM bottom date.

Small Caps' Positioning

Yesterday market rallied with small caps leading the charge. If this situation persists, we could see a sharp rise in equity prices. Over the past few weeks, investors have reduced their long bets on small caps very significantly. In the following chart, red line shows the nature of bets of large funds. Right now, they are aggressively short.

Last time these large funds were this short, small caps rallied sharply and for quite some time. This means that there is a lot of hidden rally fuel in the small cap stocks, which could result in a sharp rally. Typically, rallies start with short covering and then give way to genuine buying as people see prices rising.

From an Elliott wave perspective, recent decline from June top remains corrective (3-waves) in nature. Now we need to break above critical level to confirm this assumption. Once uptrend reinstates itself, it will be interesting times for the small caps.

On the other hand, large caps are nicely poised for a breakout.

Moreover, IPM bottom window should mark the start of the rally, which could take SP500 to above 2000 and even to 2100. A market rally under current socio-political circumstances with Russian tensions, Israel-Palestine conflict and Iraqi uncertainty, would mean that news don't drive the market. Rather, they are driven by other elements e.g. Elliott Wave & sentiment (contrarion) .

IPM turn dates have already been emailed to subscribers. Next update will be sent on July 26/27.

Market Review

While market has been going sideways for the past few days, small caps are still lagging. But this sideways movement has created significant excitement among short sellers (once again). Excitement among short sellers is typically good for bulls. Following chart shows consolidation pattern in SP500. This pattern is also present in DJIA and Nasdaq.

On the other hand, it seems like small caps have completed a 3-wave decline pattern. Which can also be bullish for the market. Furthermore, there have been 4-5 buy signals over the past few days. 

Now, readers know about the IPM bottom window. One should trade according to the turn window and their trigger. Please note that in an uptrend, market could make a higher low within turn window.

According to IPM trade matrix a 50% long signal was triggered on the close yesterday. This also the reason why IPM Trade Matrix does not go short in an uptrend. As mentioned previously, IPM trade matrix information was supposed to be shared only in the first half of 2014. A method for continuous sharing of this information will be devised before continuing publication of IPM Trade Matrix information.  

Market Overview & IPM Turn Window

Yesterday DJIA, Nasdaq 100 made new highs, while SP500 reached within 1 point of its all-time highs. All of this happened during the IPM top window. This again suggests that the Inflection Point Model is working and adding longs was the right strategy on the decline.

Following comment was posted on the blog on July 12:

"I question the i'm turn window or turn date...whatever u call it. Since u went long we've gone down or at best sideways. Seems like turn date should have been about 2 weeks later...If in fact we go up next week.

If ur method is proven u wouldn't be dollar cost averaging when it's going down...or else u just got in too early. 

I can say today is the turn and then when it goes down just say I'm adding more because someday it will go up again.

Regardless I hope ur right and it does go up but your method doesn't seem to work this time...or else the dates weren't right."

Now if we go back on July 10th and see where indices were, we get an interesting picture:

Index	July 10 – Low	July 16 – IPM Top Window	% Gain in 5 days	Annual Gain
DJIA	16805	17138	2%	99%
SP500	1953	1984	2%	79%
Nasdaq 100	3837	3947	3%	143%
GDOW	2585	2633	2%	93%
Russell 2000	1151	1160	1%	39%

The table above shows that the market did rally sharply into the IPM turn window. However, adding longs would not be possible at the lows if one did not have IPM turn window information. In this rtegard, following comment was also posted on the blog:

"Turn dates are what they are. I don't choose them, the model does. Only with the knowledge of next IPM turn window being a top, one can go long. If next turn window would have been a bottom, would have not gone long instead would have shorted.

So without the turn date and nature of the turn information, you can only guess. And guessing is not investing, it is playing in the casino. Current turn is similar to April 2013. Upcoming days will be telling."

even with this rally, I will be the first to admit that the market action has been poor. Under-performance of small caps raises many issues, especially as we enter the IPM top window. Initially, the expectation was that we will see a sharp relentless rally. However, it now feels like a subdued rise from an internal strength perspective. Therefore, one should wait for the IPM bottom window to gauge long trade on trigger.                                  

IPM Model Update

Latest IPM Model update has been emailed to subscribers.

Back Online & Quick Update

Have been keeping twitter account updated with latest developments.

• 3-4 buy signals were generated in the past few days.
• We still need higher prices within next IPM turn window
• 3 out of 5 primary indices are still above June lows, which means that June IPM low was critical and has not been violated
• Major earnings start today with Wells Fargo.
• If the market declines into the earnings, it typically rallies as earnings start

Conclusion: In for possible fireworks till next IPM turn window. Added longs on this recent decline.

IPM update will be emailed to subscribers over the weekend.

IPM Trade Matrix - Trade 11 (Part 6)

IPM Trade Matrix 2014 Trades

TRADE - 1: (Long) = +2.6%

TRADE - 2: (Short) = +9.3%

TRADE - 3: (Long) - Non IPM Trade Matrix trade = -0.2%
TRADE - 4: (Short - 1/31/14 to 2/5/14) = +7.25% 
TRADE - 5: (Long - 2/11/14 to 2/22/14) = +9.8%

TRADE - 6: (Long - 2/22/14 to 3/07/14) = +11.7%

TRADE - 7: (Long - 3/18/14 to 4/11/14) = -18.1%

TRADE - 8: (Short - 4/23/14 to 4/28/14) = +11%

TRADE - 9: (Short - 4/30/14 to 5/12/14) = +0.3%

TRADE - 10: (Long - 5/16/14 to 5/31/14) = +7.4%

TRADE - 11: 

Bought TNA at 79.5 on 6/19, 6/23 & 6/25 based on IPM Trade Matrix long trigger. Cost Basis = 79.55 

TRADE CONDITIONS
When: IPM Model Bottom window - Date info e-mailed to subscribers

Next IPM Turn Window: Top
Trigger: SP500 = 1947, GDOW = 2599
Supporting Indicators: Uptrend   

PROFIT TARGETS
Profit Target 1: 2000
Profit Target 2: 2050

RISK 
Stop: SP500 = - , DJIA = -, GDOW = -, Comp = -
Trailing Stops (GDOW + 2): SP500 = 1976, GDOW = 2630, DJIA = 16990, Comp = 4462, IWM = 119
Typical IPM Trade Matrix Risk: 1%
Actual IPM Trade Matrix Risk: -% (Entry = 1947 , Exit = 1966 , Risk = -% )
Risk Reason: Too much optimism

Applicable Rule: 

1. Sell (1/2) at profit objective 1 to minimize draw-down
2. No Trade in opposite direction
3. Do not go long or short without trigger to prevent losses by market moving against you.  
4. Observe stop-losses to minimize draw-downs
5. If stops are hit ==> Wait on the sidelines for new opportunity near IPM Turn window

Note: IPM Trade Matrix Trades will be posted in the first half of 2014. This is an experiment to understand and enhance the capabilities of this Matrix.

For Blog updates on Google+ add: Understand Survive Thrive 

For Blog updates on Twitter, add: @survive_thrive

IPM Trade Matrix - Trade 11 (Part 5)

Would like to start by thanking almighty God, who once again guided us through these tough markets. Now, congratulations to all who are long and are enjoying the ride. Today we saw an explosive move in the US markets. Best part is that none of the sell signals were triggered today. Therefore, we are still holding - possibly till next IPM turn window.

IPM Trade Matrix 2014 Trades

TRADE - 1: (Long) = +2.6%

TRADE - 2: (Short) = +9.3%

TRADE - 3: (Long) - Non IPM Trade Matrix trade = -0.2%
TRADE - 4: (Short - 1/31/14 to 2/5/14) = +7.25% 
TRADE - 5: (Long - 2/11/14 to 2/22/14) = +9.8%

TRADE - 6: (Long - 2/22/14 to 3/07/14) = +11.7%

TRADE - 7: (Long - 3/18/14 to 4/11/14) = -18.1%

TRADE - 8: (Short - 4/23/14 to 4/28/14) = +11%

TRADE - 9: (Short - 4/30/14 to 5/12/14) = +0.3%

TRADE - 10: (Long - 5/16/14 to 5/31/14) = +7.4%

TRADE - 11: 

Bought TNA at 79.5 on 6/19, 6/23 & 6/25 based on IPM Trade Matrix long trigger. Cost Basis = 79.55 

TRADE CONDITIONS
When: IPM Model Bottom window - Date info e-mailed to subscribers

Next IPM Turn Window: Top
Trigger: SP500 = 1947, GDOW = 2599
Supporting Indicators: Uptrend   

PROFIT TARGETS
Profit Target 1: 2000
Profit Target 2: 2050

RISK 
Stop: SP500 = - , DJIA = -, GDOW = -, Comp = -
Trailing Stops (GDOW + 2): SP500 = 1965, GDOW = 2610, DJIA = 16900, Comp = 4435, IWM = 120
Typical IPM Trade Matrix Risk: 1
Actual IPM Trade Matrix Risk: -% (Entry = 1947 , Exit = 1966 , Risk = -% )
Risk Reason: Too much optimism

Applicable Rule: 

1. Sell (1/2) at profit objective 1 to minimize draw-down
2. No Trade in opposite direction
3. Do not go long or short without trigger to prevent losses by market moving against you.  
4. Observe stop-losses to minimize draw-downs
5. If stops are hit ==> Wait on the sidelines for new opportunity near IPM Turn window

Note: IPM Trade Matrix Trades will be posted in the first half of 2014. This is an experiment to understand and enhance the capabilities of this Matrix.

For Blog updates on Google+ add: Understand Survive Thrive 

For Blog updates on Twitter, add: @survive_thrive

IPM Trade Matrix - Trade 11 (Part 4)

Stop level has been increased. Market is showing a breakout pattern. We might be in for a sharp rally till next IPM turn window. This rally would be the 3rd wave in terms of Elliott Wave analysis and should generate significant returns. We are still fully long, and will hold longs till either profit objectives are hit or stops are triggered. 

Overall, it seems like a lot of people started shorting the market in the last week. This will provide added fuel for a sharper rally. IPM turn date details have already been emailed to subscribers. We will based our trades on these turn dates. 

Upcoming market rally might not provide chances to get long. Therefore, if people missed the long trade, they would have to chase this market higher, which is always a dangerous proposition. In the June 14 update for subscribers, we wrote:

"In conclusion, we are in an uptrend but need a decline to alleviate optimistic extremes. We have also entered the IPM turn window. This turn window should result in a market bottom. All the indicators and supporting tools are suggesting higher prices into XXXX of 2014."

It seems like this prediction is coming true now...

IPM Trade Matrix 2014 Trades

TRADE - 1: (Long) = +2.6%

TRADE - 2: (Short) = +9.3%

TRADE - 3: (Long) - Non IPM Trade Matrix trade = -0.2%
TRADE - 4: (Short - 1/31/14 to 2/5/14) = +7.25% 
TRADE - 5: (Long - 2/11/14 to 2/22/14) = +9.8%

TRADE - 6: (Long - 2/22/14 to 3/07/14) = +11.7%

TRADE - 7: (Long - 3/18/14 to 4/11/14) = -18.1%

TRADE - 8: (Short - 4/23/14 to 4/28/14) = +11%

TRADE - 9: (Short - 4/30/14 to 5/12/14) = +0.3%

TRADE - 10: (Long - 5/16/14 to 5/31/14) = +7.4%

TRADE - 11: 

Bought TNA at 79.5 on 6/19, 6/23 & 6/25 based on IPM Trade Matrix long trigger. Cost Basis = 79.55 

TRADE CONDITIONS
When: IPM Model Bottom window - Date info e-mailed to subscribers

Next IPM Turn Window: Top/Bottom
Trigger: SP500 = 1947, GDOW = 2599
Supporting Indicators: Uptrend   

PROFIT TARGETS
Profit Target 1: 2000
Profit Target 2: 2050

RISK 
Stop: SP500 = - , DJIA = -, GDOW = -, Comp = -
Trailing Stops: Will be defined next week. SP500 = 1952, GDOW = 2600
Typical IPM Trade Matrix Risk: -
Actual IPM Trade Matrix Risk: -% (Entry = 1947 , Exit = - , Risk = -% )
Risk Reason: Too much optimism

Applicable Rule: 

1. Sell (1/2) at profit objective 1 to minimize draw-down
2. No Trade in opposite direction
3. Do not go long or short without trigger to prevent losses by market moving against you.  
4. Observe stop-losses to minimize draw-downs
5. If stops are hit ==> Wait on the sidelines for new opportunity near IPM Turn window

Note: IPM Trade Matrix Trades will be posted in the first half of 2014. This is an experiment to understand and enhance the capabilities of this Matrix.

For Blog updates on Google+ add: Understand Survive Thrive 

For Blog updates on Twitter, add: @survive_thrive